By Jack Bernard
Charlotte (N.C.) Observer, June 10, 2013
After spending 25 years in the health care field, most of it related to making hospitals more efficient and effective, I have become skeptical of many of Washington’s reform efforts, especially by my party, the GOP.
One of the biggest problems with health care is escalating, uncontrolled expenditures, taking a larger and larger proportion of our GNP. However, what Rep. Paul Ryan and the GOP want to talk about is the federal budget and cost-shifting via Medicare and Medicaid.
Experts in health care economics differ on many things. But one thing they all agree on is that raising the age for Medicare will do virtually nothing to reduce the overall cost of health care in this nation.
Under the Affordable Care Act, everyone must have insurance or be taxed. Medicare has a 3 percent administrative overhead while the private sector has run 28 percent, coming down to 20 percent as required by the ACA. Raising the Medicare age simply shifts the insurer from the government to less efficient private providers. This dumps the extra cost into the lap of the senior, who at 65 is probably unemployed and unemployable. There are no overall cost savings via efficiencies with Ryan’s Medicare “voucher” proposal.
Dr. Gerald Friedman, professor of economics at the University of Massachusetts, was in Charlotte recently for the launching of a physician advocacy group, Health Care Justice. Friedman indicated that U.S. per capita health care cost is $7,920. That compares with $3,323 in Sweden, $2,984 in Finland and only $2,686 in Italy. He points out that people in these countries are healthier than in our country and things are getting worse here. In 2001 among the non-elderly, 14 percent did not see a doctor for needed medical care. The figure rose to 26 percent in less than a decade.
Friedman pointed out that the most basic financial problem with U.S. health care is the for-profit insurance system. Insurance company profits have increased 250 percent in the last decade, Friedman said. The head of Cigna made a whopping $29 million in 2009 while health care premiums and increased deductibles are eating up more and more of workers’ wages.
He further pointed out that the administrative cost of health care insurance is one of the major drivers of escalating health care costs from 1980 to 2005. According to Friedman, the administrative cost of private insurance will be $200 billion in 2013. In the U.S. billing costs run $83,975 per doctor per year versus only $22,205 in Ontario.
This is waste, pure and simple. Although the Affordable Care Act pushed through by the Democrats does not do enough to solve the issue, the current GOP proposals totally ignore it.
A related area is prescription drugs. We pay 60 percent more than other countries. Our nation is in effect providing a subsidy to all the others. Why should we pay more to develop drugs that are used elsewhere, not just here?
What is the best course of action to provide better health care and reduce the growth of national health care expenditures? Dr. Friedman’s cure is to move to single payer.
Single payer would drive down costs because Medicare (or a utility-like private single payer insurer) would have leverage to keep costs down. With no other game in town, providers would be forced to operate more efficiently. Drug companies would be pressured to give Americans the same drug pricing that is found elsewhere.
Friedman pointed out that in multiple state studies (independently done by several groups), single payer turns out to save money. In his own studies, he has shown savings of around 20 percent for North Carolina, Pennsylvania and Massachusetts, and even more in Colorado and Maryland.
According to Friedman, a North Carolina single payer system would produce enormous savings, $18.7 billion per year. Surely, at a time when wage earners are being faced with ever increasing premiums and higher deductibles, we should at least consider Medicare for all or a similar single payer system.
The real question is whether either party is willing to stand up to the drug and insurance lobbies and do what is best for America.
Jack Bernard is a retired health care executive, former Jasper County, Ga., commission chairman and former chairman of the Jasper County Republican Party.